Kenyan businesses need to embrace Open APIs
What you need to know:
- There is perhaps a great lesson in this Walmart model for local retailers who have never made the attempt to mine the data they hold in silos, yet their current business model is beginning to plateau
- Lufthansa became one of the first airlines to enable Open API for third party agents to offer flights directly from their apps
- Banks like Equity, that have an interface with communication and could possibly do the same with insurance and retail, are on the cusp of creating a financial revolution
About two weeks ago, I sat down with Mr John Sneh, IBM’s worldwide sales leader for Application Programming Interfaces (APIs), for a chat on digital transformation.
He asked me what we in Kenya considered to be digital transformation and I gave him a long-winded answer, which he magnanimously accepted.
It emerged from our conversation that he takes digital transformation to mean the application of technology to our activities, processes and relationships in order to create new models of doing things, and to unleash our utmost potential in our endeavours.
According to insights from the 2015 Global C-Suite Study produced by IBM’s Institute of Business Value, 80 per cent of Chief Officers are experimenting with different business models or thinking of doing so.
Many organisations have ideas and information on how to meet the customers' increasing demands, but in silos.
Digital transformation, through Open APIs, is making it possible to breathe coherence into these thoughts and to begin building an API economy for inclusiveness. APIs are technologies that allow two or more software programs to communicate with each other.
An application’s APIs outline the ways in which other applications can access its data. For example, M-Pesa’s API can allow Little Cab to access its services and also accept Little Cab’s payments.
Similarly, when you pay for books at Amazon, it is Amazon’s API that enables the communication which fulfils the transaction. APIs are, therefore, the building blocks of digital business.
In the digital economy, businesses can use APIs as digital products. They can use them to pivot or make their products and services extendable, reaching the largest audience.
Open APIs enable organisations to expose their data to third-party digital channels to enhance their competitiveness and customer experience. More often than not, these digital channels create an ecosystem beneficial to both the customer and the other parties in the ecosystem.
The ecosystem is like a chama (savings group), where you have agreed to share one another’s data for a common purpose. A member can make use of a combined piece of information from the common pool to defeat a competitor who does not have similar access and visibility.
In this arrangement, where social networks are utilised efficiently, a start-up could leapfrog others and become as good as the combined strength of its ecosystem. Enterprises need to appreciate the power of ecosystem digital economy to get ahead of the pack.
Uber, the taxi- hailing company as we know it, is actually a technology company that has perfected the art of consuming internal, private and public APIs. For instance, ordering a ride takes locating it in your geography using Google Maps APIs.
Walmart, the world’s largest retailer, provides access to its “extensive product catalogue, thus enabling digital distribution partners to earn substantial affiliate revenues from customer referrals.”
There is, perhaps, a great lesson in this Walmart model for local retailers who have never attempted to mine the data they hold in silos, yet their current business model is beginning to plateau.
They must seek new ways of doing things to be sustainable and open up their data, in combination with others, to increase their competiveness.
Lufthansa became one of the first airlines to enable Open API so that third-party agents could offer flights directly from their apps.
The German carrier says developers will use the airline’s standardised data, available to developers in a controlled manner, for direct ticket sales in far-flung areas including Kenya, thus effectively creating new agents.
Developers “will now be able to use the interface to integrate direct booking links for offers from Lufthansa, Eurowings and Austrian Airlines into their web and app-based offers. They will be able to increase the appeal of their services by incorporating Lufthansa products and will also receive compensation for the prominent display of Lufthansa products on their websites whenever the API integration generates bookings on lufthansa.com.”
Kenya Airways can borrow a leaf from Lufthansa to globally enable developers create new products out of their data, and perhaps bundle services to give deals to its customers and improve its competitiveness.
Techies across the world leverage Open APIs and a bit of IBM cognitive computing to create the best travel schedule and experience. Organisations whose assets are not sharable miss out on the opportunities developers create.
IBM’s approach to this digital transformation is a fascinating one. More than a century of existence has led them to glean five guiding principles from its breadth and depth of knowledge.
In the age of Cloud adoption, creating the rhythm for everything to work together for an organisation or business will take into consideration the following:
(i) hybrid integration to build on what they have today and only change what needs to change,
(ii) develop productivity to give them the speed to innovate, experiment and continuously deliver the things they need
(iii) powerful, accessible data and analytics to get closer to the customer and make smarter decisions in real time
(iv) cognitive solutions to go to the next level of natural human engagement and deeper understanding of dark data, and finally,
(v) choice with consistency, because how and where they develop and deploy data does matter.
Infrastructure and data that available today will eventually dovetail with capabilities on the cloud to unleash incremental value at scale and agility never experienced before.
APIs will stitch most of these platforms together and provide avenues for reuse of established and repeatable services. These connections alone lend themselves to rapid industrialised deployments, from ideation to launch.
Nowhere has the debate on Open API been raging as in the banking sector. This is because the banking sector has enormous data in silos, which would create gigantic value to both customers and institutions if it were well used.
Such data is more likely to create a beneficial ecosystem than could in any other industry.
If they opened up their APIs, banks would take only seconds to approve loans to customers. In sharing the data, they would have a greater understanding of their customer than they do from credit reference bureaus.
IBM emphasises the need to expose this data on the back of a robust security infrastructure and are on this journey with a number of clients in East Africa. There are opportunities galore in creating a banking, communication, insurance and retail ecosystem to fully understand customer behaviour and serve them better.
This, in my view, would put Kenya on another level of innovativeness, destroy traditional methods of establishing creditworthiness and create an inclusive society.
Banks like Equity, that have an interface with communication and could possibly do the same with insurance and retail, are on the cusp of creating a financial revolution.
Governments too need to create their own ecosystems to interface with those in the private sector and improve on efficiency and service delivery. The silos in Immigration, the National Bureau of Registration, Lands, Registrar of Companies, and other key government agencies could create thousands of jobs if opened up.
Travel agents, researchers and even government itself often want to know how many tourists are visiting the country at any one moment and where they come from, without waiting for annual totals. This data is available but rarely shared to enable better decision-making.
Data that is left in silos is wealth not exploited. Let’s create sharable open data.
The writer is an associate professor at University of Nairobi’s School of Business.Twitter @bantigito